Cost the American Empire?
Few Americans know that our great republic has become an empire
with tentacles stretching to some 130 countries around the globe.
Large contingents of American soldiers occupy Germany, Japan, and
South Korea. Smaller detachments can be found in other countries.
Huge bases, which supply the US Navy ships that dominate the seas,
stretch from Japan to the Azores. Now, the US is building bases
for a long (permanent?) stay in Afghanistan. No detachments for
Afghanistan; the situation there requires an occupying force.
After World War
II, the reason for US troops to be stationed around the globe
was to contain the USSR and the spread of communism.
Even with the collapse of the USSR more than ten years ago, US
troops remain spread around the globe. This is to maintain the
American Empire. There is no other reason.
When the USSR fell
apart, it withdrew its troops from the Warsaw Pact nations and
the once-feared Russian army became a shell
of its former self. US troops could have been pulled out of Europe,
yet they remain and are a constant reminder to the Europeans that
the US carries the big stick. While Germany may disagree with the
US in some areas, the issue of US troops on German soil never rises.
Only France had the hubris to tell the Americans to get out. The
US also lost important bases in the Philippines. Overall, though,
since WWII the American Empire has expanded.
Rule by Force
An empire imposes its
will on its "territories" by force.
Often, there is the pretense of protection, such is the case today
with American Empire and was the case with the British Empire.
Frankly, the British Empire was brutal, with India probably suffering
the worst under British rule. The American Colonies, in a rebellion
that shocked the world, threw off the British yoke and set the
example for other countries under the Union Jack thumb. (If King
George had not been so arrogant, imposing high taxes and boarding
British troops in Colonists’ homes, we could be British subjects
today. The prominent Colonists at the time considered themselves
loyal Englishmen but objected to George’s heavy thumb. George should
have lightened up a little.)
most famous empire was the Roman Empire, which stretched from
what are now England, Spain, and Portugal in the North and
West to Iraq, Syria, and southeastern Turkey in the East. To the
south, Egypt and Palestine fell under Rome’s rule. The Roman Empire
was known not only for the many people it conquered and large area
it ruled, but also because it lasted some 1300 years. Other empires,
although important in their times, pale in comparison to the Roman
Before Rome, Greece
had its fling with empire. Egypt had a great run as well. In
Asia, the Mongols controlled the largest
geographic empire in history, but the Mongol Empire was only one
of many Asian empires. In more recent history, Britain, France,
Spain, Portugal, the Netherlands, Germany, and Japan have had empires.
The Aims of Empire are Economic
extracted tribute from
the people it conquered: grain from Egypt, gold and silver from
Spain, copper from Cyprus,
and tin from Britain. The Balkans supplied iron ore and gold, and
Greece and Italy mined marble for Rome’s buildings. The forests
of Asia Minor and Central Europe provided lumber. Of course, all
conquered peoples supplied slaves to Rome.
200-year empire, it robbed the Incas and Aztecs of their gold
and silver. Such huge quantities of gold and silver
did the conquistadors bring home that Spain suffered from inflation.
(Remember, inflation [rising prices] is caused by an increase in
the money supply, and gold and silver were the monies of the time.)
After the discovery
of North America, all the European imperialists sought a foothold.
Initially, it was the hope for gold and the
fur trade, but when it was learned that the climate in the South
was ideal for growing cotton, Great Britain encouraged the practice
of slavery to keep the cost down. Great Britain wanted cheap cotton
for its textile mills, which produced greater profits than did
the growing of cotton. (In fact, some historians maintain that
Great Britain was so determined to have cheap cotton that it fanned
the flames that led to the Civil War.)
France gave up part of its empire in North America when it
sold its Louisiana Territory to the new United States of America.
Spain lost its North American territories piecemeal. During the
War of 1812, Spain made the mistake of letting the British use
Pensacola as a naval base. So, in 1814, General Andrew Jackson
marched to Pensacola and took the place. Afterwards, Jackson led
excursions into Spain’s Florida Territory in the First Seminole
War, establishing US hegemony over the region. The thousands of
American settlers who had rushed to Florida also helped. In 1819,
Spain ceded Florida to the US. By 1825, Spain had lost its North
Germany, Britain, Portugal, and the Dutch had great success
in Africa, where they mined valuable ores and shipped home foodstuffs.
(Afrikaans, South Africa’s second official language, is a combination
of Dutch, English, German, French, and Bantu.) In India, the Brits
plundered the land, taking home agricultural products and anything
else it wanted. Portugal once claimed Brazil as a colony.
Sage Advice Ignored
George Washington’s admonition to avoid foreign entanglements
has long been forgotten. If our first president’s warning is even
brought up during a talking heads discussion, which
today frame the political issues, it is dismissed as irrelevant
in today’s world, or not even addressed. Only Pat Buchanan talks
about the American Empire. In fact, he wrote A Republic,
Not an Empire to warn against the dangers of empire.
book became a bestseller, its impact has been minimal. Talking heads programs,
where most Americans get their political "knowledge," defend the
direction of US foreign policy, which has gone far beyond foreign
entanglements to empire. Further, our leaders deny a foreign policy
of empire. They claim only to be "looking after US interests."
With treaties of foreign entanglements, we are involved in
other nations’ affairs. Through empire, we attempt to run other
nations’ affairs. The best examples are Germany and Japan, defeated
more than fifty years ago and still under the thumb of US empire.
Germany has been the counterbalancing force against Russian dominance
of Europe, the US prohibits the
Germans from building a substantial military. Instead, a couple
hundred thousand US troops are based in Germany under the pretense
of defending against Russian aggression. In Japan, a similar situation
Japan has stood against China’s
domination of Asia. Yet, Japan is not permitted to build a military
of significance. Instead,
the US 7th Fleet is supposed to contain China. In reality,
US troops in Germany and the 7th Fleet also keep Europe
and Asia following the "US line." The result is that
we extract tribute, even as did the Roman Empire, only in a more
The Dollar: the
World’s Premier Reserve Currency
A reserve currency
is one that central banks hold as backing for their currencies.
The 1944 Bretton Woods agreement made the US
dollar the world’s only reserve currency. Then, the dollar was
redeemable in gold by foreigners; however, in 1971 Nixon closed
the gold window, leaving dollar holders stuck with paper.
In recent years other currencies have grown in stature and
are now accepted as reserve currencies. For instance, the US Treasury
counts euros and yen, along with gold, in its reserve holdings.
Still, the dollar is the world’s principal reserve currency, and
the bulk of central bank paper assets are dollars.
As the table shows,
many of the top 15 central banks hold as reserves significant
quantities of both gold and paper currencies
(mostly dollars). Yet, only the US and France hold at least 50%
of their reserves in gold. Most countries, notably Japan, China,
and Taiwan, hold the bulk of their reserves in dollars.
banks want to alter the make-up of their reserves, they have
few options. They can
sell dollars for euros or yen, or sell euros or yen for dollars.
And, they can sell paper currencies for gold. China did that
in December 2001 when it bought 105 tons of gold. The Bank of
England earlier this year finished dumping 395 tons, the proceeds
of which supposedly were converted 40% to dollars, 40% to euros,
and 20% to yen.
the low prices that the BoE got for its gold and the low interest
it is receiving,
especially on its yen and dollar investments, that had to be
one of the worst investment calls of the decade. Maybe not as
bad as the major Wall Street brokerage houses that recommended
Enron all the way to bankruptcy, but selling gold below $300
and buying low-interest paper assets was not a brilliant move.
How the US Collects Tribute
The US collects tribute via its trade
deficit. Its current accounts deficit (which includes goods and
services) will hit about $500 billion this year, which means
Americans will receive this year $500 billion more in goods and
services from foreigners than we will deliver to them. The US
has been running deficits for decades, and, according to Bridgewater
Associates, foreigners currently hold 48% of the US Treasury
bond market. (Foreigners also own 24% of our corporate bond market
and 22% of all US corporations. In total, foreigners hold $8
trillion of US financial assets.)
down to this: We get goods, and foreigners get little pieces
of paper called dollars,
which, as we all know, the Fed prints at will and are not redeemable
in gold. Since we are running a trade deficit, it means foreigners
are selling us more goods than they are buying from us; therefore,
they have excess dollars, which are used to purchase Treasury
bonds. By accepting and holding our dollars, foreigners are financing
our trade deficit and our deficit spending. Economists call this exporting
inflation. We print the paper money and foreigners
end up with it.
Back in the days before Nixon
closed the gold window, a trade deficit meant that gold flowed
out of Ft. Knox into the surplus nations’ vaults. Now, foreigners
get only dollars.
true that foreigners collect interest on the US Treasury debt
they own. But, the interest
is paid in dollars, which the Federal Reserve – it is now getting
redundant to say – prints at will. So, the interest piles up and
buys still more US Treasury bonds. The workings are much like
what Marco Polo discovered when he visited China in the mid-1200s.
the great Mongol emperor Kublai Khan had devised an ingenious
scheme for enriching himself
and financing his empire, chicanery that Europeans had never
seen but would later employ with much pain. Kahn printed paper
money from mulberry tree bark, stamped the money with his official
seal, and declared it legal tender. Anyone caught refusing the
paper money was killed.
When traders visited the land,
they first offered their goods to Khan’s agents, which paid with
the paper money. This did not upset the traders because they
knew that no merchant would refuse the great Khan’s paper money.
So, traders filled their ships or loaded their caravans with
goods purchased with the paper money. Kublai was ahead of his
Today, few economists fear paper
money, unless a country prints too much. The printing of a little
is okay because "a little inflation" is accepted as
benign. Kublai Kahn’s paper, however, illustrates just how dangerous
paper money is. If the merchants arriving with goods to trade
had taken home Kahn’s mulberry paper money, they would have returned
with nothing of value because except in Kahn’s empire the paper
money was worthless.
dollar illustrates the dangers of paper money today. As long
as the rest of the world
accepts dollars (buys US Treasury debt and, in some countries,
uses dollars for money), the status quo continues. Yet, because
dollars are not redeemable in gold, they have real purchasing
power only in the United States. If (when?) dollars are rejected
abroad, they can be spent only here. Considering that the US,
under its free trade rush to globalization, has exported much
of its manufacturing capacity, what will foreigners buy with
dollars? We do not have that much to export, hence our massive
balance of trade deficit.
It was not until the early 1700s
that John Law laid to waste the French economy with paper money.
Following World War I, Germany’s Weimar Republic destroyed its
economy and the paper Riechsmark via the printing press. Now,
the United States is forcing the paper dollar on the world.
glance, one might say that the foreigners hold significant US
assets and, therefore,
could greatly influence US policies, politically and economically.
Not exactly. There is an old saying about debt that goes something
like this: If I owe you $100, you got me. But, if I owe you
$100,000, I got you. Besides, did you ever try collecting
from an 800-pound gorilla? Remember, the US is the world’s sole
which dearly loves to run a trade surplus with the US – which
means we run a trade deficit
with them – may be the perfect example. The Bank of Japan
owns some $461 billion in US Treasury debt, but dumping those
for yen is not a serious option. The US would frown on it.
Besides, Japan believes the solution to its economic woes lies
in a weak yen, which makes exports cheaper. If Japan sold dollars,
that would cause the yen to rise against the dollar, making exports
to the US more expensive. So, we print the dollars and the Japanese
stick them in their vaults and proclaim them assets.
Although nowadays we run a bigger
trade deficit with China than with Japan, the Japanese’s stash
of $461 billion (mostly in US Treasury notes, bills, and bonds)
dwarfs the Chinese central bank’s holdings of $264 billion. Taiwan,
another big exporter to the US, holds about $157 billion in Treasury
trade deficit with these three Asian countries raises some interesting
primary one being Why do they do it? For Japan,
it is a way of life. The US has dominated the country since WWII,
and Japan depends on the US military for defense. Further, Japan,
as evidenced by the paltry amount of gold it holds in its reserves
(1.7%), is hooked on paper.
which holds only 3.2% of its reserves in gold, also depends on
the US, namely the 7th Fleet,
for its security. China considers the island nation to be a renegade
state that must return to the fold. For the US, however, Taiwan
is a major source of computer chips that support US technology.
Letting Taiwan fall to China – without first having Taiwan’s chip-producing
facilities and technology relocated – would be an unmitigated
disaster for the US economy – and the US military. Yes, the US
is stupid enough to let the microchips needed for its military
to be produced abroad.
China has only 2% of its reserves
in gold. Yet, holding all those dollars without complaint is
not that bad a deal for China. That is because US corporations
are moving massive amounts of manufacturing capability to China.
Along with the plants comes technology. So, China does get physical
plants and technology in return for holding dollars. When US
companies quit moving there, or when China believes it can "go
it alone," China may be a seller of dollars, but that’s
probably far into the future.)
Enter the Euro
Europeans have long resented the US
being able to finance its affairs with printing press money.
But, with the USSR looking down their throats, Europeans tolerated
it. US troops stood as a shield against USSR aggression. With
the collapse of the USSR, however, Europe moved swiftly to join
the US in the enviable position of being able to print a paper
currency qualified to be called a reserve currency.
came the European Common Market; then the euro, one currency
for the European Union. Already,
the euro claims reserve status. (The US holds euros – and yen – as
part of its reserves.) Over time, the euro could become serious
competition for the dollar. For example, OPEC could start pricing
oil in euros, but that would be a bold move for now considering
US influence because of its economic and military might. However,
no military force backs (enforces the acceptance of?) the euro.
The dollar remains king of the hill.
Might Makes Right?
No country today even begins to compare
militarily with the United States, and President Bush has said
it will remain that way. In a June 2 speech at West Point, Bush
said, "America has – and intends to keep – military strengths
beyond challenge, thereby making the destabilizing arms races
of other eras pointless and limiting rivalries to trade and other
pursuits of peace." Other nations can pursue trade, but
they can forget about challenging US military supremacy.
If there were any doubt about
Bush’s intentions, on August 7, he followed up the West Point
statement with, "There is no telling how many wars
it will take to secure freedom in the homeland." To
secure "homeland freedom," the President has told us
that a regime change in Iraq is a must and that he is prepared
to invade to make that change. If that is not empire talk, what
In his A Republic, Not an Empire,
Pat Buchanan made the first loud assertion that the United States
had gone down the road to empire. Despite the book being a bestseller,
the book’s theme was lost on Americans. When the media do not
discuss a matter, it is the same as if it did not exist. Nevertheless,
slowly the message is getting out.
in his newsletter The
Privateer, has pulled no punches. The United States
is imperialistic. European critics of US policy are screaming,
but the US media ignore the cries. Yet, with European news
accessible via the Internet, some Americans are getting information
outside the controlled US media.
comes Jay Bookman, writing in the Atlanta Journal-Constitution an
editorial titled The president’s real goal in Iraq. Bookman’s
"This war [with Iraq],
should it come, is intended to mark the official emergence of
the United States as a full-fledged global empire, seizing sole
responsibility and authority as planetary policeman. It would
be the culmination of a plan 10 years or more in the making,
carried out by those who believe the United States must seize
the opportunity for global domination, even if it means becoming
the "American imperialists" that our enemies always claimed we
goes on to ask poignant questions, like why does the Bush administration
about an exit strategy from Iraq? "Because
we won’t be leaving," Bookman
answers. He also notes that the Bush administration dismisses
the option of containing and deterring Iraq, as we did the Soviet
Union for 45 years. Even if containment and deterrence worked,
they would not allow the expansion of American power. "Besides,
they [the Iraqis] are beneath us as an empire. Rome did not stoop
to containment; it conquered."
his assertions, Bookman draws from a position paper written in
2000. Titled Rebuilding
America’s Defenses, it was prepared by an establishment
group called the Project for the New American Century. The report
lists 27 persons as having attended meetings or contributed papers
in preparations of the report. Six of those have since assumed
key defense and foreign policy positions in the Bush administration.
administration, in its Security
Strategy, a document in which each administration
outlines its approach to defending the country, seems to
have adopted the concepts proffered in Rebuilding America’s
Defenses. Bookman writes:
"To address the terrorism
threat, the president's report lays out a newly aggressive military
and foreign policy, embracing pre-emptive attack against perceived
enemies. It speaks in blunt terms of what it calls ‘American
internationalism,’ of ignoring international opinion if that
suits U.S. interests. ‘The best defense is a good offense,’ the
"It dismisses deterrence
as a Cold War relic and instead talks of ‘convincing or compelling
states to accept their sovereign responsibilities.’
essence, it lays out a plan for permanent U.S. military and economic
every region on the globe, unfettered by international treaty
or concern. And to make that plan a reality, it envisions a stark
expansion of our global military presence.
"‘The United States will
require bases and stations within and beyond Western Europe and
Northeast Asia,’ the document warns, ‘as well as temporary access
arrangements for the long-distance deployment of U.S. troops.’
report's repeated references to terrorism are misleading, however,
because the approach of
the new National Security Strategy was clearly not inspired by
the events of Sept. 11. They can be found in much the same language
in the report issued in September 2000 by the Project for the
New American Century, a group of conservative interventionists
outraged by the thought that the United States might be forfeiting
its chance at a global empire."
representatives, supporters, and cabinet members deny assertions
that the United States has become imperialistic. (Secretary of
Defense Donald Rumsfeld: "The
United States does not covet other nations’ territory.")
Yet, 57 years after WWII, we still have major bases in Germany
and Japan. Now comes Iraq and the Middle East, and foreign policy
makers are not talking paternalistic; they are sounding quite
day before the UN passed Resolution 1441, which sanctions a US-led
attack if Iraq does
not comply completely with UN inspection of Iraqi facilities
suspected of working on or building WMDs, President Bush said
from the White House: "We have no territorial ambitions.
We don’t seek an empire." This brings to mind the adage Actions
speak louder than words.
Kagan, a professor of classical Greek history at Yale University
and an influential advocate
of a more aggressive foreign policy, co-chaired the 2000 New
Century project. As a private citizen, he can be more blunt in
what he thinks US foreign policy should be. Still, Kagan and
others shy away from terms such as empire, knowing the
connotations. Yet, they talk imperialistic. From the Bookman
for example, willingly embraces the idea that the United States
would establish permanent military bases in a post-war Iraq.
"‘I think that's highly possible,’ he
says. ‘We will probably need a major concentration of forces
in the Middle East over a long period of time. That will come
at a price, but think of the price of not having it. When we
have economic problems, it's been caused by disruptions in our
oil supply. If we have a force in Iraq, there will be no disruption
in oil supplies.’
"Rumsfeld and Kagan believe
that a successful war against Iraq will produce other benefits,
such as serving an object lesson for nations such as Iran and
Syria. Rumsfeld, as befits his sensitive position, puts it rather
gently. If a regime change were to take place in Iraq, other
nations pursuing weapons of mass destruction ‘would get the message
that having them . . . is attracting attention that is not favorable
and is not helpful,’ he says.
is more blunt: ‘People worry a lot about how the Arab street
is going to react,’ he
notes. ‘Well, I see that the Arab street has gotten very, very
quiet since we started blowing things up.’"
The Cost of Empire is High
The best way
to figure how the federal government is doing financially is
to monitor its debt growth.
In fiscal 2001, US debt increased $133 billion. In 2002, it climbed
$421 billion. In October, the first month of fiscal 2003, US
Treasury debt rose $55 billion. Considering that Gulf War II
has not yet started and that the recession (denied by the government)
is only getting started, multiplying $55 billion X 12 may understate
this year’s deficit. Consider also that only last June Congress
raised, after much political posturing, the official debt limit
to $6.4 trillion. Exploding federal deficits soon will
slam the US up against that debt limit.
we spent $281 billion on our military, which was more than the
next 11 nations combined.
In 2003, our expenditures will rise to $378 billion. The increase in
our defense budget from 1999–2003 will be more than the total
amount spent annually by China, our next largest competitor.
Further, we have a balance of trade deficit and a budget deficit
to be financed. Luckily, the US is about to gain control of a
lot of oil, the world’s second largest reserves.
All that Iraqi Oil
revenues from the sale of Iraqi oil will be used to "establish a benevolent
regime in Baghdad," but the economic benefits to the US
will be enormous. The US consumes 25% of the world’s oil and
imports more than half the oil it uses. Lower oil prices would
go a long way toward boosting the US economy and would help slash
the US trade deficit. Obviously, the rest of the industrialized
world would benefit also. The Commerce Department has said so,
according to an Investor’s Business Daily article.
war on Iraq could boost the global economy by eliminating a terrorist
releasing fresh oil supplies onto world markets." Of
course, that "fresh oil" is the oil that Iraq is not
permitted to pump because of sanctions from the 1990 Gulf War.
After Gulf War II, if it goes as smoothly as its advocates say
it will, Western World technology, capital, and expertise will
be rushed to the region.
Economist says that Iraq’s oil is a “major secondary
consideration” for going into Iraq, which sits atop the world’s
second largest oil reserves. Currently Iraq produces about one million
barrels daily. If Iraq were pumping its potential of 3.5 million
barrels a day, that could break OPEC’s stranglehold on the
world’s economies. (The 2.4 million barrels per day in the
table reflects “lagging” production. Many oil experts
put Iraq’s current production at less than one million barrels
The graph clearly shows the impact that OPEC has had on oil prices.
Since its formation, OPEC has sucked billions of dollars out of
here is what William Saffire has to say about Gulf War II (from
New York Times op-ed page): "After our
victory in the second Gulf war, Britain would replace France as
the chief European dealer in Iraqi oil and equipment. Syria, the
Security Council member that has been the black-market conduit
for Saddam's black gold, would be frozen out. The government of
New Iraq, under the tutelage and initial control of the victorious
coalition, and prosperous after shedding the burden of a huge army
and corrupt Baath Party, would reimburse the US and Britain for
much of their cost in the war and transitional government out of
future oil revenues and contracts."
Saffire also wrote:
production from a non-OPEC Iraq, matched by Saudi price cuts
desperate to hold market share, could well reduce
world oil prices by a third. This would be a great boon to the
poor in many developing nations, rejuvenate Japan and encourage
prosperity worldwide, though it would temporarily impoverish Putin's
Russia, now wholly dependent on oil revenues."
With the cost of empire being so high, just as Kublai Khan did
not allow the refusal of his mulberry bark money in his empire,
George Bush will not allow the dollar to be rejected in the American
Empire. Yet, history shows that rebels are always with us.
Rome fell to the barbarians; the Colonists threw off the British
yoke; the French threw US troops out of France; and, the euro was
conceived to challenge the dollar. The euro challenge, while not
yet serious, in time could be. For a military, the EU proposes
a 60,000-troop force that would be outside NATO, which is essentially
a US operation.
has ever willingly given up its rule. All empires have ended
defeats or wars that have drained the empires’ willingness
to continue paying the costs of empire. This is not to suggest
that Iraq will defeat the US in Gulf War II. However, occupying
Iraq would not be a picnic.
Iraq: the Quagmire
Three ethnic-religious groups are the main forces in Iraq. The largest
group is the Muslims, most of which are either Sunni or Shiite.
Although the Sunnis comprise no more than 17% of the Iraqi population,
they rule through the Baath Socialist Party, of which Saddam Hussein
is a member. Shiites make up at least 60% of Iraq’s population
and would like to run the country but are stymied by Hussein. Then,
there are the Kurds, most of which are Sunni; however, Kurds are
not Arabs, adding more fuel to an already combustible situation.
Although maybe only four million strong in Iraq, some 15 million
to 20 million Kurds live in northern Iraq, southern Turkey, and
eastern Iran, an area commonly called Kurdistan. The Kurds would
like their own independent country; unfortunately for the Kurds,
no country in the region wants these tough, bellicose people to
have their own country, not Iraq, not Turkey, not Iran, not Armenia,
no one. The US has probably promised Turkey, in return for its
support in Gulf War II, that it will not support an independent
Kurdistan. Further complicating matters, there is hostility between
the Sunni Kurds and the Shiite Kurds.
belief in the US is that a deposed Hussein will result in a “democratic” government.
But, getting these groups to work together, instead of vying
for power and settling old grievances,
will probably require an occupation force unlike any ever attempted
by the US military. Controlling Germany and Japan after WWII was
relatively easy. Both nations were devastated militarily, economically,
and spiritually. The people were ready for peace. The same cannot
be said of Iraq, despite all Iraqis being oppressed and suffering
from the lack of even basic medical care. Installing leadership
acceptable to all groups may be impossible.
A war on and the occupation of Iraq will be costly. In Gulf War
I, other nations offered troops (primarily for support, except
the Brits) and helped fund the war. Some analysts say it cost the
US very little to fight that war. This time, however, only the
Brits have signed on for real, although there may be a few Aussies
on board. The rest of countries that supported us in Gulf War I
have jumped ship. No matter, Bush says we will go it alone if necessary,
whatever the costs.
Estimates of the cost of a Gulf War II range from $90 billion to
$200 billion, depending on how easy things go. If it is a cakewalk,
$90 billion; but if it is drawn-out, with house-to-house fighting
that extracts greater costs (lives also), then $200 billion may
be the number.
Some analysts assert – if there is a Gulf War II – that
Saddam Hussein will opt for urban warfare, with a goal to survive.
When he squared off against the US and its allies in Gulf War I,
he was roundly trounced, and his military is much less formidable
than it was before being smashed in Gulf War I. He will not repeat
that mistake. House-to-house fighting, the reasoning goes, will
result in US casualties, something that the US populace will not
tolerate. The dangers of such fighting have not been lost on the
In October’s Army magazine, Lt. Gen. Edwin Smith called urban
warfare “the great equalizer.” And, this is recognized
by the Iraqis. Senior Iraqi officials have said that they will
try to lure US forces into Baghdad, where the US technology advantages
would be somewhat nullified, where buildings shelter enemy forces
from reconnaissance aircraft and satellites and the presence of
civilians makes the use of even the smartest bombs more difficult.
Corps studies show that battlefield casualties exceed 30% in
urban operations involving troops who receive,
on average, only two weeks of urban combat training per year, which
is what US troops receive. A retired Marine colonel, now a Pentagon
contractor, recommends that 36 infantry battalions – about 18,000
troops, or roughly half the Army’s infantry force – receive
intensive training in urban operations right until they deploy
to the Persian Gulf. Most of this training goes on a Fort Polk,
Iraqi urban strategy stems from the quick US withdrawal from
after the loss of only 18 rangers – in house-to-house
fighting. Additionally, when we participated in the bombing of
Belgrade to remove Slobadan Malosevic from power (another empire
move), pilots were instructed to release their payloads from altitudes
that kept US planes out of the reach of ground-to-air missiles.
Unfortunately, the policy resulted in many bombs, despite being “smart,” missing
their targets and killing civilians, the people we were supposed
to have been freeing from Malosevic’s grip.
also that the media’s constant showing pictures
of US casualties and body bags played an important part in the
US exit from Vietnam. Hussein and his advisors, the reasoning goes,
believe that the Americans will not stand for a protracted war
in Iraq. Hussein undoubtedly knows that he cannot defeat the US
in another face-off. So, he will hope for a Vietnam type victory.
(Of course, Vietnam did not have the world’s second largest
oil reserves, so Hussein may be misguided in this thinking.)
The Cost of Empire
of empire is high, the biggest being the military needed to enforce
empire’s policies instead of a “standing
army” that would be sufficient to deter or defeat our most
likely enemy. Then there are the costs of maintaining embassies
around the world, where our ambassadors keep the other countries
informed as to our wants and policies.
cost – which we are just now starting to pay – is “homeland
security,” which is necessary because of all the enemies
we have made around the world. Many people do not want to be ruled
by another nation, especially when that other nation is of a different
culture and has a different religion. Some of these people – as
9/11 sadly proved – are willing to die in their fight against empire.
The cost to the airline industry alone is in the billions. Consider
also the cost of security at government buildings.
postulate that it is cheaper to buy the goods demanded in tribute
to take them. It would be more cost effective,
they say, if we used the resources that we have put into the military
to build products that could be exchanged in peaceful, mutually
beneficial commerce. Why not just build more widgets, sell them,
and buy Iraq’s oil? As always, there are many reasons for
war, and the coming Gulf War II is no different. (There is also
the problem that US industry has exported its manufacturing capability
to benefit from lower labor costs, making it more difficult to
have US products that will compete on the world’s markets.)
First, Saddam Hussein is developing – or already has – weapons of
mass destruction (WMDs). However, was he responsible for 9/11?
No evidence has tied him to 9/11. (Yet, Hussein reportedly compensates
the families of suicide bombers who die in their fight with Israel.)
Additionally, he has no means of delivering WMDs against us, although
he could – but the link has yet to be proven – use terrorists. He
does have, however, missiles capable of delivering WMDs against
Israel. Therein lies another rationalization for Gulf War II.
is not stopped, he will become a serious threat to Israel. That
reason Iraq’s oil sales have been restricted
since Gulf War I. If he were permitted to sell 2 million to 3 million
barrels a day, in short time he would rebuild his military. Although
Israel’s military is the 800-pound gorilla in the Middle
East, the Israelis are outnumbered so badly that they would be
destroyed in a war of attrition, which the Arabs seem likely to
fight. But, as long as the Israelis have the only WMDs in the region,
the likelihood of another Arab-Israeli war is diminished. This
is not lost on Israel’s supporters in the US government.
Regardless of the political speculation – the whys, the whos, and
the reasons – the United States has embarked on the road to empire.
Some observers say we are already there. And, the cost is high.
Our military costs are skyrocketing, and we do not have even one
formidable enemy today. Instead, Americans are attacked by terrorists
who are permitted to enter freely and travel about our country.
After 9/11, commonsense dictated that our government should have
the implemented and enforced immigration polices that would have
prevented the Beltway Snipers from killing. Instead, we maintain
a military capable of occupying a country halfway around the world.
We could secure our borders with a fraction of the increase in
military spending, but we do not. Yet, we spend millions hiring
security personnel to check our pockets when we get called for
jury duty or go downtown to pay our water bills.
have taken the road to empire, we have to consider the costs
and cents, and ask if we can afford it. The fiscal
year ended September 30 registered a federal deficit of $159 billion.
Next year’s is projected at $165 billion. Those numbers,
however, are without counting the money borrowed from the Social
Security “trust fund.” Add in the money sucked out
of Social Security funds, and next year’s deficit swells
to $322 billion, about 3.2% of GDP. If the economy weakens more,
the deficit will rise higher.
Additionally, we are embarking on this trip at a time when our
balance of trade deficit is approaching $500 billion a year. This,
of course, is not – as explained herein – a problem as long as the
rest of the world continues to accept our dollars in exchange for
their goods. However, most wars are more sustainable when funded
from savings bases and income levels that can be taxed, as was
WWII. Today, however, the US debt level – federal, state, municipal,
individual, and corporate – is at unprecedented levels. This war,
with costs estimated between $90 billion and $200 billion, will
have to be financed via the printing press. The Fed will make the
A Road Full of Potholes
The road to empire is not only expensive but full of potholes. It
used to be said, “The Sun never sets on the British Empire.”
The sad truth is that the Sun never set on the graves of the British
soldiers who paid with their lives to maintain the British Empire.
Are Americans willing to pay that price?
Frankly, we cannot afford the financial cost of empire unless the
rest of the world (at least most of it) continue to accept our
paper dollars for their goods, and put those dollars in vaults
and continue to call them assets. If not, then hyperinflation will
destroy the dollar and all investments that are denominated in
Consider also how a Gulf War II could spread if Israel enters the
fray. Arab countries that today may remain neutral – or even offer
us the use of bases – could join in attacking Israel. This would
leave the US having to decide if its purpose in the Middle East
is to disarm Iraq or to support Israel. It is a situation that
boggles the mind and is fraught with dangers.
A Time for Gold and Silver
If there were ever a time for gold and silver, it is now. The whole
world is on a fiat monetary system. No country will redeem its paper
currency in gold or silver. History is replete with examples of
paper money having destroyed nations’ economies and rendered
worthless their citizens’ savings. Although the hyperinflation
that ripped Germany 19171922 is the most notorious, many other
instances could be cited.
History also shows that whenever a country starts down the paper
money road, it continues until its currency is destroyed. There
is no reason to believe that the results will be any different
for the dollar. This time, however, the suffering and the losses
will reach a magnitude not seen before because the whole world
is on a paper money system, not just one country.
Fiat money finances the US Empire. As long as the producers of
real goods accept paper dollars, put them in their vaults and call
them assets, we will muddle along. But, there will come a day when
the dollar is recognized for what it is: a piece of paper, redeemable
not in gold but only in goods made in America. With globalization,
the US manufacturing base is dwindling. As fewer goods are made
in America, dollars have less value, for dollars ultimately are
redeemable only in US goods. While the rest of the world accepts
dollars, fine. Yet, when dollars are recognized for what they are,
then gold and silver will be recognized for what they are: real
Haynes [send him mail]
is a graduate of the University of Colorado with a BS in Finance.
Since 1973, he has been a precious metals bullion dealer and is
an advocate of investing
in silver and gold. Before turning to hard money, Bill was a
stockbroker with a large Wall Street firm.
© 2003 LewRockwell.com